Coronavirus to impact U.S. retail imports during February

Since many Chinese factories shutdown because of coronavirus, the National Retail Federation (NFR) and the Hackett Associates issued their “Global Port Tracker” report, pointing out that imports at U.S. retail container ports are expected to have a drop during February.

“Many Chinese factories have already stayed closed longer than usual, and we don’t know how soon they will reopen. U.S. retailers were already beginning to shift some sourcing to other countries because of the trade war, but if shutdowns continue, we could see an impact on supply chains.”

On a year to year comparison, NFR forecasts that February will be down to 12.9% at 1.41 million TEU, while March is expected to have a decrease of 9.5% at 1.46 million TEU.

We still do not know how long will coronavirus influence the world, but many reports showed that Chinese government is trying very hard to control it. Thus  we expected that April might have an increase at t 1.82 million TEU, up to 4.5% year-over-year.

Concluding, coronavirus situation causing the extended shutdown of China, freight rates might decrease a lot during this period.

Air cargo disrupted

It’s not just shipping that’s been affected, air cargo will also be affect.
IAG Cargo, the air cargo arm of British Airways parent IAG (ICAGY), on 02/03/2020 canceled all services to and from mainland China for at least the remainder of the month, citing a UK government travel advisory, according to a statement on its website.
German logistics group DHL has reported “severe disruptions to inbound and outbound air cargo shipments, trucking and rail cargo services.”
The lockdowns could have a “major impact on supply chain operations and industrial production” in China across industries such as automotive, pharmaceutical and medical supplies, and high-tech manufacturing, it said in a report.
DHL has suspended deliveries in Hubei province, the epicenter of the virus, but said it doesn’t foresee other changes to its operations.
UPS (UPS) and FedEx Express (FDX) said they continue to fly into and out of China. UPS said it has seen reduced demand for its services as a result of business closures.
— Daniela Sirtori-Cortina contributed reporting.

US trade deficit drops 1.7% last year to $616.8 billion

WASHINGTON — The U.S. trade deficit fell for the first time in six years in 2019 as President Donald Trump hammered China with import taxes.

The Commerce Department said Wednesday that the gap between what the United States sells and what it buys abroad fell 1.7% last year to $616.8 billion. U.S. exports fell 0.1% to $2.5 trillion. But imports fell more, slipping 0.4% to $3.1 trillion. Imports of crude oil plunged 19.3% to $126.6 billion.

The deficit in the trade of goods with China narrowed last year by 17.6% to $345.6 billion. Trump has imposed tariffs on $360 billion worth of Chinese imports in a battle over Beijing’s aggressive drive to challenge American technological dominance. The world’s two biggest economies reached an interim trade deal last month, and Trump dropped plans to extend the tariffs to another $160 billion in Chinese goods.

But goods trade gap with Mexico rose 26.2% last year to a record $101.8 billion. The goods deficit with the European Union also hit a record, $177.9 billion — up 5.5% from 2018.

Overall, the United States posted a $866 billion deficit in the trade of goods such as cars and appliances, down from $887.3 billion in 2018. But it ran a $249.2 billion surplus in the trade of services such as tourism and banking, down from $260 billion in 2018.

Trump campaigned on a promise to reduce America’s massive and persistent trade deficits, which he sees as a sign of economic weakness and the result of lopsided trade deals that put U.S. exporters at a disadvantage. He has negotiated a new trade agreement with Canada and Mexico that he says will bring more balance to trade in North America.

Mainstream economists argue that trade deficits are largely the result of a big economic reality that doesn’t respond much to changes in trade policy: Americans spend more than they produce, and imports fill the gap.

In December, the overall trade gap widened 11.9% percent to $48.9 billion as exports rose 0.8% to $209.6 billion and imports climbed 2.7% to $258.5 billion.

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